Israeli troops arrested dozens of Hamas ministers and parliamentarians today as they stepped up their campaign to free a soldier kidnapped by militants in Gaza at the weekend.

The Israeli army said that 64 Hamas officials, including eight ministers and 20 other parliamentarians, had been detained in the series of early-morning arrests.

The Palestinian deputy prime minister, Nasser al-Shaer, went into hiding to avoid capture and an Israeli minister hinted that even prime minister Ismail Haniyeh would not be exempt from arrest or possible assassination.

"No one is immune... This is not a government. It is a murderous organisation," infrastructure minister Benjamin Ben-Eliezer told Ha'aretz newspaper.

Among those held were Abdel Aziz Duaik, the speaker of the Palestinian parliament, and religious affairs minister Nayef Rajoub.

Palestinian negotiator Saeb Erekat, an ally of president Mahmoud Abbas, condemned the arrests. "We have no government, we have nothing. They have all been taken," he said. "This is absolutely unacceptable and we demand their release immediately."

A statement released by Israel's foreign ministry said that the arrests were necessary. "Recent events and especially those of the last few days prove that the results of the elections in the Palestinian Authority were translated into a government policy of terrorism," it read.

Jacob Dalal, an army spokesman, said: "They are not being used as bargaining chips. These are people with terrorist records, with allegations and charges pending against them."

The urgency of the hunt for Corporal Gilad Shalit, a 19-year-old soldier abducted at the weekend by a Gaza-based group of militants including members of Hamas, was stepped up today after the body of an 18-year-old Jewish settler kidnapped on Sunday was discovered near Ramallah in the West Bank.

Eliahu Asheri, the son of an Australian Jewish convert, had been shot execution-style in the back of the head. His kidnappers said the killing was in retaliation for Israel's military drive into the Gaza Strip, which began yesterday in an attempt to track down Cpl Shalit's kidnappers.

The Israeli drive into southern Gaza yesterday was the first such action since the withdrawal of Jewish settlers from the Strip last year. Tanks drove into Palestinian territory, warplanes flew over urban areas and leaflets were dropped warning of an upcoming attack.

Water and electricity were also cut off to large sections of the strip, raising accusations that Israeli forces were punishing local Palestinians in general for the actions of the militant group.

In the north of the Gaza Strip, hundreds of Palestinian gunmen took up positions ahead of an expected Israeli push into the territory.

Israeli warplanes also buzzed the summer house of the Syrian president, Bashar al-Assad, yesterday. The move was a show of force against a country that has sheltered several senior members of Hamas for years.

The group's leader, Khaled Meshaal, who is suspected of ordering the kidnap of Cpl Shalit, lives in Syria's capital Damascus. In 2004, Damascus-based Hamas leader Izz el-Deen al-Sheikh Khalil was killed in a car bombing thought to have been caused by Israel.

The daring attack at the weekend, which involved the Palestinian militants tunnelling into Israeli territory and engaging in a fierce gun battle which left two dead on either side, has brought Israelis and Palestinians closer to war than at any time in over a year.

It has overshadowed a major breakthrough between the Palestinian Hamas and Fatah parties, who agreed on Tuesday to a joint political platform that contains an implicit recognition of Israel.

The agreement is considered a major step forward for Hamas, an extremist party which denies the right of Israel to exist and insists on armed struggle against the Israeli government.

The so-called "prisoners' document", drawn up by Palestinian militants in Israeli jails, called for a Palestinian state alongside an Israel confined within its 1967 borders.

Although it falls short of the explicit statements demanded by Israel and the international community, it was hoped that it would offer enough wiggle room for the EU and US to reconsider sanctions imposed against the Palestinian territories because of Hamas' listing as a terrorist group.

The Hamas and Fatah parties have been in deep rivalry since January elections for the Palestinian parliament, which resulted in sweeping victories for Hamas. Palestinian president Mahmoud Abbas is a member of the more moderate Fatah party.